Why I Love My Credit Card

Why I love my credit card image

I applied for my credit card (only one!) when I turned 18 and had an initial credit limit of $600. In 2007, it was pretty easy to qualify for a credit card- even as an 18 year old heading off to college in the fall with no income. Things changed slightly after the financial meltdown, and by 2010 my 18 year old brother couldn’t qualify for a credit card for anything! Because I got my credit card at 18, I started building credit history a full three years before someone who had to wait until they were 21 and three years makes a big difference.

By the time I was 25 and my husband and I were ready to buy a house, I had a credit score above 800 and a lot of history built up- time was on my side. I know a lot of people that still today don’t have the credit history to get a loan on a house with the best interest rates available.

Frequent flyer miles are just an added perk. I use my Alaska Airlines card for everything from groceries to monthly utilities and I’ve been able to take many free flights using miles I have earned. From a trip to Chicago to run the Chicago Marathon, to my honeymoon in Europe, most of my recent trips have been covered by miles I have earned just paying my monthly living expenses- if only I could get miles for my monthly mortgage payment!

Credit cards aren’t for everyone. If you’re someone who can’t control your spending, credit cards probably aren’t for you. My husband and I stick to a budget, and pay off our credit card each month so running up debt isn’t worrisome to us. A lot of people see their credit limit as “free money” (someone actually told me this once!) and spend until their card is maxed out. Then they’ll pay it down a little, and spend to the max again. This is a HORRIBLE idea. You will end up paying so much in interest and will never get out of debt if this is your philosophy. I do however think if you’re a responsible spender, credit cards can be a good thing.

4 Tips For Creating A Budget

Tips for creating a budget

Creating a budget (and sticking to it) is the best way to start saving money, however it can seem overwhelming for those who don’t know where to start. Below I have some tips for how to create a seamless budget.

  • Look at your previous month’s spending. Pull all bank statements, debit card, and credit card transactions to see where you spent your money last month. This will help guide you in planning your budget for next month. I prefer to download my statements into excel and categorize each of them. E.g. water, sewer, electric, and gas would all fall under “utilities”. I then sum up each category so I can see how much I am spending on groceries vs eating out or entertainment. This is usually how my sheet ends up looking (note- these are not actual numbers, I just made them up):


Details $ Spend Category   Category Sum Total
Movies $22.50 Entertainment   Entertainment $159.02
Gas $110.00 Utilities   Utilities $110.00
Rent $2,000.00 Rent   Rent $2,000.00
Shopping $100.00 Entertainment   Groceries $275.00
Groceries $125.00 Groceries      
Dinner Out $36.52 Entertainment      
Groceries $150.00 Groceries      


  • Follow the 50/20/30 rule for easy budgeting. This is a great way of thinking for someone creating their first budget. You should aim for 50% of your budget to be directed toward your fixed costs. This include rent/mortgage, utilities, car payments, gym memberships, and everything else you pay for monthly that doesn’t fluctuate much in cost. 20% of your take home pay should go toward savings and long terms goals. That includes contributing to your 401k, building your emergency fund, and making additional payments (beyond what is required per month) on debt. 30% of your take home pay should be spent on lifestyle choices. I mentioned gym memberships in fixed costs, but many would also consider this to be a lifestyle choice. Groceries and other expenses that change from month to month fall under this category. If your monthly fixed costs are taking more than 50% of your take home pay, you need to reevaluate how you’re allocating your pay check. Do the math with your own take home pay. If you make $3,000/month, no more than $1,500 should go toward fixed costs, $600 toward savings and long term goals, and $900 toward lifestyle choices.


  • Start creating your budget. Now that you know how much you tend to spend each month, and how much of your take home pay you should be spending on each category, it’s time to put pen to paper. I prefer to do my budgeting in excel because I can manipulate it anyway I want. There are of course great tools out there as well to help you create a budget like Mint, but I find it just as easy to create an excel spreadsheet. When you’re just starting out with your budget, it also forces you to keep a closer eye on what you’re buying. For example, if I go to target and buy both clothing and groceries, I can look at my receipts and add them to the appropriate category instead of just labeling them entertainment OR groceries.


  • Track your budget. Once your budget is created, make sure you’re tracking your budget. I look at my spending at least three times a week. My husband would say I’m obsessed, and I get it, not everyone is going to look at their budget that often but I do encourage you the first month to pay very close attention to your spending and how you’re tracking to your budget. If one area is coming in over (your car breaks down or you have another unexpected expense) try to pull money away from your lifestyle budget and not your savings and long terms goals if you can. If you’ve never followed a budget before it might seem difficult but I promise if you stick to it for a few months it really will become second nature.


Good luck and Happy Saving!


Save Money or Pay Debt?


I’m often asked whether or not you should save money in an emergency fund, or pay off debt first. While a lot of people may argue you should pay down your debt first, I know firsthand how important an emergency fund can be.

According to a USA Today poll of over 1,000 participants, 34% had no emergency savings AT ALL! That means they can’t pay for a simple car repair, or the $650 dental bill I got last month. It also means when these situations come up, people are putting them on their credit card and going even further into debt. The poll also revealed 47% of participants couldn’t cover their living expenses for more than 90 days.

Before paying off your debt, you should have three months’ worth of living expenses saved in your emergency fund. When calculating your living expenses, include your necessities- rent/mortgage, utilities, cell phone, etc. Gym memberships and other entertainment can be cancelled or cut back on in the event you lose your job and therefore aren’t as crucial. You should however factor in how much you spend on weekly groceries, and don’t underestimate it.

Once you decide how much to save each month or bi-weekly, set up automatic deposits into your savings account. If you’re waiting until the end of the month to move money from your checking account to your savings account, you probably aren’t because there isn’t much money left. I always have my monthly savings come directly out of my check.

Obviously you can’t ignore your debt and you will need to make the minimum payments until you have that three months’ worth of living expenses saved. Once you hit that savings goal I encourage you to start throwing more money at your debt, paying off your debt with the highest interest first. Typically a credit card will have a much higher interest rate than student loans, and even car loans. I like to have a decent amount in savings, so I don’t completely cut off my contribution to my savings account. I would look at how much you can save each month, and continue putting 25% of that into your savings while putting 75% toward paying down your debt.

How much money you have in your savings account is really personal preference. Having less than 4 months makes me uncomfortable but that’s not to say I haven’t been there. My husband and I had to put $79,000 down when we bought our home in June. Less than eight weeks after moving in, our hot water heater and furnace went out. Luckily we had the money in savings to pay for that ($6,500) unexpected expense, but between that and our house down payment it left us with less than 4 months of living expenses in an emergency fund. Since then we have been contributing more to our emergency fund each month and trying to cut back on non-necessities.

While paying down debt is important because the longer it takes you to pay it off the more interest you will have to pay, you can’t afford not to have money in savings. You will only accrue more debt when emergencies come up and you are forced to put it on your credit card. Start small and you’ll be amazed how quickly you can build up your savings account to three months’ worth of living expenses.

Happy Saving!